Agricultural and monetary shocks before the great depression: A graph-theoretic causal investigation

This paper uses graph-theoretic methods to investigate the causal relationships between agriculture, money, interest rates, prices, and real GDP in 12 countries during the years 1869–1929. We find that agricultural production directly and indirectly causes real GDP in two-thirds of the cases. Moneta...

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Bibliographic Details
Published in:Journal of macroeconomics 2006-12, Vol.28 (4), p.720-736
Main Authors: Perez, Stephen J., Siegler, Mark V.
Format: Article
Language:English
Subjects:
Agricultural production
Agriculture
Business cycles
Causality
Economic history
Economic shock
GDP
Graph theory
Graph-theoretic
Great Depression
Gross Domestic Product
Historical business cycles
History
Interest rates
Manycountries
PC algorithm
Prices
Studies
U.S.A
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Summary:This paper uses graph-theoretic methods to investigate the causal relationships between agriculture, money, interest rates, prices, and real GDP in 12 countries during the years 1869–1929. We find that agricultural production directly and indirectly causes real GDP in two-thirds of the cases. Monetary shocks also play an important causal role in about half the cases, but unlike agriculture, the causal links are usually indirect through other variables to real GDP. The direct causal link between money and prices is also particularly strong. Between 1869 and 1929, money causes prices in nearly all of the countries in the sample.
ISSN:0164-0704
1873-152X
DOI:10.1016/j.jmacro.2005.02.003